There is a New tax law that requires payment processors (Ebay, Paypal, etc.) to send out a 1099-K to anyone who collects $600 or more. You will have to pay taxes on that.
This is part of H.R.1319 - American Rescue Plan Act of 2021 Section 9674 - Link:
https://www.congress.gov/bill/117th-con ... F9A98A4109
- Where you supposed to be doing this all along and paying taxes on profits? Yes, but a lot of folks were not, and will now be forced to. You never had to pay taxes on losses (where you sold something for less than you paid), but now you will have to track that data for tax purposes.
- This starts January 2022. So this year is fine, but next year the change takes place. January 2023 you will receive a 1099-k from payment processors based on sales from 2022 (if you sell over $600 with that Payment Processor). This will be part of your 2022 taxes.
- The 1099-K is for all payment received. So if you sell something on Ebay, for $10 plus $6 shipping, and the buyer pays $2 in taxes (collected by Ebay on your behalf), a total of $18. You will be taxed on the full $18.
- Expenses are deductible and you will have to track them. Taxes collected and paid on your behalf by ebay, shipping costs, fees, packing materials, even mileage to and from the post office, the original purchase price of the item you are selling, etc. You will need to collect all of that information, and be able to prove it in case of an audit.
- One problem: Many of us do not have our original purchase receipts. So deducting that may not be possible.
- The taxable income may be very small if you track and have receipts for all expenses.
Please note I am not a tax expert. Maybe some here is, and can elaborate, but I wanted to put out this information for discussion.
This is going to have an impact on collectors as a whole, whether you sell or not. A lot of folks will no longer want to bother with online sales and have to deal with taxes. That’s going to limit the products available on the second hand market, and limit the kinds of sellers willing to deal with all of this. I have a feeling that in time, second hand prices may rise as there is less competition from regular Joes.
Buy a wave of Marvel Legends for the BAF and decide to sell off the unwanted figures, and now you may have to deal with tracking expenses and paying taxes (if you sell $600 worth). That’s another hurdle that a lot of folks may not want to deal with. It’s easy to get to $600 too, that’s just $50 in sales a month.
I would be interested to hear your thoughts, and how you think this will affect the collecting community as a whole